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Advance Child Tax Credit and deceased taxpayer

ritastone001
Level 4

This question is family related, so I understand if everyone needs to be cautious with opinions. I have a niece who died unexpectedly recently. Her 16 yr old daughter is now in custody of grandparents. Now how to stop the advance credit?  The opt-out option requires an account to be set up. I am thinking just close my niece checking account and let the advance payments be returned to the IRS.  Except she was also due a refund concerning the Unemployment tax law change, and that should be deposited to that account. Any advice will be greatly appreciated. I just think I am too close to this situation to think clearly.

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9 Replies 9
dkh
Level 12

Won't your niece need to file a 2021 tax return, therefore she would be claiming CTC on the that return. So why stop the advance payments?

 

ritastone001
Level 4

She died in April. Wouldn't the grandparents be the ones entitled to all credits for 2021. Yes a return will need to be filed for her. But since the dependent will live with the grandparents for more than 6 months of the year they would be entitled to credits.  

rbynaker
Level 11

Will the niece's income be low enough that she falls under the safe harbor for repayment of excess advance CTC?

We're in uncharted waters.  My inclination would likely be to do nothing and sort it out on the 2021 tax return.

Rick

ritastone001
Level 4

I hadn't thought of that. Something to add to her file for filing her final return. Thank you!

IRonMaN
Level 15

You betcha!

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
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BobKamman
Level 15

IRS was fairly efficient at cutting off EIP’s to deceased taxpayers, after the fiasco of the first round. I would wait and see whether advance CTC payments are made. If they are, IRS may issue guidance on returning them if that’s what the estate decides. The daughter is apparently the beneficiary, but since she’s a minor the decisions are perhaps being made by the grandparents. I assume the father is out of the picture.

ritastone001
Level 4

The grandparents will be making most if not all decisions for their granddaughter. And the father is out of the picture.  Not qualified for anything.

IRonMaN
Level 15

If you close the bank account, they will just end up sending a check.  I'm with Rick, keep the money and sort it out later.  Worse comes to worse, you send the money back when the return is filed.

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
ritastone001
Level 4

Again, this is something I had forgot about. Yes they will send a check. I am leaning toward doing nothing and handling everything on the tax returns. As I am sure there will be further guidance given as the 2021 tax season begins and continues. I will make sure the grandparents are aware and understand what will be going on. 

Thanks to everyone. I greatly appreciate being able to get other opinions!